- The Washington Times - Monday, January 22, 2007

Because of their many missions — from landing on the moon to inspecting nuclear and meatpacking facilities to running museums — federal workers are an interesting, diverse group.

Each of them essentially belongs to one of two groups: the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS).

The one common denominator is that members of each system think the other has it made.

The old CSRS, which was replaced by FERS in the mid-1980s, has a more generous civil-service annuity benefit than FERS does. FERS has a more generous 401(k) plan option than CSRS does.

CSRS employees don’t pay into Social Security, although they do pay Medicare. FERS employees pay into Social Security but pay much less into their pension program.

Most pros say that for “lifers” — those who make a full career in government and retire from government — the old system is superior. But for the two-thirds of feds who don’t work long enough to qualify for an annuity, FERS is best. That is because of the Social Security coverage and the more generous 401(k) plan with its matching government contributions.

One perk that CSRS employees enjoy is the option to get in on what amounts to a government-backed guaranteed certificate of deposit. This year, it is paying 4.875 percent. In 2006, the rate was 4.125 percent.

The government calls it the “voluntary contributions program.” Once the Office of Personnel Management accepts your application, you can deposit money as often as you like, on your schedule, provided it is in increments of $25.

The amount you can put into the program is huge — up to 10 percent of your lifetime federal salary. That makes it an excellent candidate for a safe-haven place to park an unexpected cash windfall, from winning the lottery to an inheritance.

Mike Causey, senior editor at Federal News Radio AM 1050, can be reached at 202/895-5132 or mcausey@federalnewsradio.com.

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